>That sounds thoroughly reasonable, and it sort of is, but please let me explain because the crazy is in the details. What was happening was that Amazon was discounting the price of the ebooks, and it may seem like this is something the Big 5 would want to stop, except the markdown was coming off of Amazon’s end. In other words, if Hachette wanted to charge $15.99 for an ebook, and Amazon marked it down to $9.99, Hachette was still paid their cut of the full price of the book. More people will buy a book at $9.99 than at $15.99, so essentially, the Big 5 was coming out ahead in this arrangement in every conceivable way. They collected royalties at an unreasonably high price point while moving the number of units that corresponded to a lower price point.
Sounds good, unless you factor in other Hachette customers that get the shaft, because a company with deep pockets like Amazon uses their cash reserves to undercut them with unhealthy margins (actually negative margins).
This is downright monopoly behavior. Why should they accept it?
And of course those other outlets will complain to Hachette or ask for the same prices.
It's also a good way to screw the customers in the long run, as they get their cheap books from Amazon first, and then when the other stores with lesser means have died (unable to keep up with the negative margins), they can jack the prices again...
Everyone keeps saying that Amazon has a secret evil plan to become THE source for everything and then jack up the prices, but no actual evidence of this ever happening.
"Secret evil plan"? That's the very open and natural thing for any monopoly to do. It has been done by monopolies time and again.
Amazon just haven't reached that status in most areas yet.
And where it has, e.g. books, it already used its power to manipulate producers and the market in its favor. Siphoning millions for selling books below what you pay for them is not some kind of marketing trick, it's anti-competitive behavior meant to kill less loaded rivals...
Sounds good, unless you factor in other Hachette customers that get the shaft, because a company with deep pockets like Amazon uses their cash reserves to undercut them with unhealthy margins (actually negative margins).
This is downright monopoly behavior. Why should they accept it?
And of course those other outlets will complain to Hachette or ask for the same prices.
It's also a good way to screw the customers in the long run, as they get their cheap books from Amazon first, and then when the other stores with lesser means have died (unable to keep up with the negative margins), they can jack the prices again...